With the recent approval of the foreign universities bill by the cabinet, many people interested in Indian higher education are riding a wave of optimism and expecting that there will be a number of highly reputed institutions like Harvard and Yale establishing campuses in India. On the other hand, some people believe this will open the floodgates for poor quality institutions to enter India and take unfair advantage of students. Both these views are extremes and require a dose of reality.

In these times of budget cuts and decreasing endowments for universities, there are very few reputed foreign universities that would be willing or able to establish campuses in India. Public universities in the UK and US are facing financial turmoil and private non-profit universities which rely on tuition and endowments are facing the worst fall in their endowments since the recession.

Apart from increasing constraints on financial resources, building a world-class institution takes significant amounts of time and resources. The trend of off-shore international campuses at other destinations like the Gulf, gained traction because of the substantial financial incentives provided by the host countries.

Having a global brand name and financial support may be necessary but it is not sufficient. Some of the off-shore campuses of foreign universities in the Gulf are finding it difficult to fill classes. In addition there are big names who have had to shut down their operations in an embarrassing manner. For example, the University of New South Wales closed down its Singapore campus in 2007 in what The Australian newspaper wrote was one of "the higher education sector's worst business failures", for the reason of enrollment shortfall.

Top reputed universities are now even more cautious about their brands and look for substantial financial support and autonomy to be present for an off-shore campus. In the Indian context, government is not in a position to provide any financial incentives nor it could ensure complete autonomy from socio-political influences. Overall, this makes the case for reputed institutions entering in India quite weak.

The only segment in higher education that has been prospering even in these troubled times is 'for-profit' higher education, which includes the University of Phoenix. A recent cover story in the Chronicle of Higher Education states that: "At a time when American public higher education is cutting budgets, laying off people, and turning away students, the rise of for-profit universities has been meteoric." This is evident in the financial growth of universities like DeVry, whose revenue grew by 34% from $1.09 billion to $1.46 billion in the year ending June 2009. However, the government is not interested in inviting this sector to India.

This means that for-profit universities are not allowed by government and reputed not-for-profit universities might not find it feasible to start their own campuses. Does that mean that the bill will make no impact on the interest of foreign universities in India? No. There is interest and there will be increasing interest by foreign universities. However, the form and nature of their presence needs to be rationalised.

There are three segments of universities interested in going to India with different needs and objectives:

Prestige-enhancing (top-50 research universities)
This is the segment of universities that are not interested in India as a source of revenue. They are primarily interested in adding to their existing prestige and relevance by offering access to their faculty and students to the emerging and increasingly important market of India. These universities would not establish fully-fledged campuses in India in next five years. However, they would be very keen to establish partnerships with universities in the form of student exchanges, faculty exchanges and collaborative research projects. For example, Yale has just clarified that it does not envisage setting up a campus in India, but is interested in expanding partnerships. Universities might establish research and executive education centres. For example, their own research centers and executive education centers. For example, Harvard Business School established an India Research Center.

Prestige-seeking (next-tier of 100 universities)
These institutions seek internationalisation to build their prestige and at the same time seek opportunities to enhance revenue. They might be open to establishing campuses by themselves or in partnership. This set of universities is open to engaging in more extensive arrangements including joint degrees and twinning programmes. For example the National Management School has partnered with Georgia State University to offer a joint MBA programme. This also includes universities from the UK forming partnerships to offer degrees or centres in India. For example, Lancaster University partnered with GD Goenka to establish the GD Goenka World Institute.

Revenue/profit maximising
These institutions are primarily looking for additional sources of revenue/profit through enrolments. In this category, lesser known public universities could engage in twinning programmes but would probably not have resources to start their own off-shore campuses.

While private for-profit institutions are very interested in and financially capable of entering India and having a fullly-fledged presence, they are not welcome under the current policy framework. Human Resource Development Minister Kapil Sibal has clarified that education will remain a not-for-profit sector. Thus, despite having the potential and interest to enter India with full campuses, for-profit institutions might have to limit themselves to partnerships. For example, the Educomp-Raffles partnership in the area of design. It is also important to note that this sector is most susceptible to fly-by-night operations and requires close monitoring.

Interestingly, despite different needs and objectives, all the above segments of foreign universities face challenges entering India. These challenges not only exist in the form of unrealistic policy direction but also in terms of institutional expectations mismatches. The Indian government is interested in attracting highly reputed universities and likewise, every Indian institution aspires to collaborate with top brand names only. This overlooks the whole spectrum of quality and diversity available in the global higher education system.

Policymakers should not forget that the financial investment needed to expand access (US$25 billion projected by the end of 2012) cannot be met by government alone or even partnerships with a handful of prestigious institutions. Some will have to come from profit/revenue maximising institutions that have the efficiency and incentives to scale offerings.

The real test of a quality assurance system is to differentiate wheat from the chaff. Thus, government should focus on creating effective regulatory mechanism for monitoring foreign institutions, instead of simply not allowing for-profit institutions to enter India.

India needs the high quality teaching and research provided by research institutions but also the 'massification' that could be catalysed by the next tier of institutions. Undoubtedly, the foreign universities bill is a positive development as it will improve quality and practice in higher education. However, it has to be enacted in the context of the needs of India and the landscape of global higher education for delivering best results.

* Dr Rahul Choudaha specialises in international academic collaborations, strategic management of higher education and market development. He is based in New York and edits the blog www.DrEducation.com. He can be contacted on Rahul@DrEducation.com.

* This article, "Foreign Universities in India: Reality check", was first published on www.DrEducation.com. It is republished with permission.

Comment:
This article has fully analysed the implications of allowing foreign universities to set-up campuses in India. But it should be remembered that in India only about 10-12% of school students have access to higher education. Already majority of the colleges are in the hands of private sector and are unable to fill their seats due to an exorbitant fee structure and capitation money collection practices. In Tamil Nadu state alone this year, about 51,000 engineering seats are lying vacant without takers. In this context no foreign university is going to set up campuses to provide higher education to poor Indian students for affordable cost. In fact these foreign universities may provide opportunities for students from affluent families to study a foreign degree in India for lesser cost.

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